US Imposes Chinese Tariffs | Weekly News Update

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US to impose 10% tariffs on $300B in Chinese goods

US President Trump announced on Thursday that the US will impose 10 percent tariffs on $300 billion worth of Chinese goods.  This comes just after US representatives returned from trade talks in China. Trump tweeted that the talks were constructive, but China had agreed to buy agricultural products from the US, “in large quantities, but did not do so.”  The tariffs are set to take effect on September 1.  The tariffs could increase or decrease depending on how future trade negotiations play out.  The president even mentioned, “It can be lifted to well beyond 25%.”

If the additional tariffs take effect, every good coming into the US from China, minus a few exemptions, will have a tariff applied to it, ranging from 10 to 25 percent.  The most recent threat would impact more consumer products like electronics, apparel, and toys.  This move would put downward pressure on demand and the energy used to ship these goods.  Crude oil and diesel markets plummeted due to the news.  West Texas Intermediate (WTI) dropped roughly 8 percent or down $4.63/bbl, which is the largest one-day drop since July 2018.  Diesel followed suit and dropped over 10 cents per gallon or roughly 4 percent.

Why BNSF is bucking the PSR trend and adding logistics centers

Precision Scheduled Railroading (PSR) has been a hot topic in transportation and has become the industry standard for most Class I railroads.  PSR is a strategy that aims for railways to run fewer, faster, and longer trains in the hope of gaining a lower operating ratio and remove inefficiencies in their network.  BNSF is the one US railway that is going against the strategy.  They are planning to add logistics centers to serve their customers in metropolitan areas, instead of removing them.  The company is expanding in Hudson, CO; Fontana, CA; Oklahoma City, OK; Sweetwater, TX; and Wilmington, IL.  The hope is to expand volumes in agriculture and intermodal.

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WSJ: Merger of Yards in South Korea, China Will Control Global Shipbuilding

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Supply Chain Dive: Why BNSF is bucking the PSR trend and adding logistics centers

In contrast, to the majority of Class I railroads shedding lines and closing yards under the precision-scheduled railroading (PSR) philosophy, BNSF is adding logistics centers to serve customers in metropolitan areas.

JOC: Schneider closes final-mile division

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Supply Chain Dive: Trump: US to impose 10% tariffs on $300B in Chinese goods

Trump told reporters outside the White House Thursday negotiators from the U.S. and China would meet again in early September. He said the reason for the Sept. 1 tariff implementation date was not to allow negotiation time, but rather because “it takes a long time for the ships to come over.”  Also see, Trump Threatens New Chinese Tariffs, Rattling Investors Across Markets.

Reuters: U.S. hiring slows; shorter factory workweek a red flag

U.S. job growth slowed in July and manufacturers slashed hours for workers, which together with an escalation in trade tensions between the United States and China could give the Federal Reserve ammunition to cut interest rates again next month.

WSJ: Tariff Fight Knocks Off China as Top U.S. Trading Partner

The standoff between Washington and Beijing has cost China its position as the U.S.’s top trading partner, a shift that could accelerate as President Trump moves to ratchet up tariffs even more.

This weekly publication is designed to highlight relevant industry news to provide professionals in the transportation, supply chain, and energy sectors with up-to-date information in a rapidly changing marketplace. This update is purely a compilation of industry news and as such, does not necessarily reflect the opinion of Breakthrough. We do not warrant or guarantee accuracy or completeness of information. For additional information, please contact us at info@breakthroughfuel.com.

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